Paper based accounts payables systems are used by 75% of all companies recently surveyed by The Aberdeen Group. Studies show that costs for these systems are typically between $ 12.00 and $ 65.00 or more per invoice and can take as long as 45 days or more to process. Even smaller AP departments are “transaction rich” and require the manual sorting, distribution, processing and retrieval of a host of documents by employees that are internal and external to the department. As a result, the cost of manual labor to support this process can be one of the highest in the organization. Accounting departments report that up to 40% of their time is spent researching the location, status and payment date for inbound invoices. And, of course, AP professionals and CFO’s want and need better visibility into the work process.
Here are some of the top drivers for accounts payable automation, from a management perspective:
- 70% want to reduce overall costs of their accounts payable process
- 51% want to reduce the invoice to payment cycle time
- 39% want to improve visibility into the accounts payable process
- 27% are looking to reduce staff
- 23% are looking to improve their compliance with governmental regulations such as Sarbanes-Oxley and audits
The good news is that by automating this critical process, savings of between 35% and 55% are achievable. Here is how it’s done:
- Inbound invoices are scanned in the mailroom or AP department. This is sometimes called “Scanning to Process”. Specialized software scans the invoices, identifies the vendor and automatically extracts key data from the invoice.
- The invoice image file and extracted data are then passed to your line of business application for processing. At this stage, a substantial amount of manual labor has been eliminated in that the data entry function largely becomes a data validation function.
- Invoices are matched and routed electronically to each member of the approval process based upon your unique business rules.
- Upon approval, invoices are released for payment within your system.
By eliminating most of the AP hard copy and manual data entry, substantial savings will occur. The electronic workflow process provides an on demand “window” into your payables process. Since the process is electronic, you get immediate status as to where the invoice is in the process, who has it and can even provide reminders to approvers or escalation as needed.
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